Jefferies Reviews Gaming and Lodging Industry (BYI, ISLE, IST, SHO)

Jefferies took a look at companies Bally Technologies BYI, Isle of Capri Casinos ISLE, International Game Technology IGT, and Sunstone Investors SHO, in a research report published today. In the report, Jefferies noted Bally's systems contract with Isle Vista casinos as a positive, stating, "This contract win is consistent with our view that BYI will continue to build on its market leadership in the systems business segment, which we believe will continue to become increasingly important as the casino industry becomes more competitive over time." Regarding Isle of Capri Casinos, Jefferies noted, "Without considering the 795,000 shares available through a possible over-allotment, the news suggests that ISLE could generate about $54.3 million from the offering. Settlement of the offering is expected to occur on January 25, 2011... We believe the completion of the offering removes a prospective overhang on the shares." Jefferies appeared optimistic on International Game Technology after the company released its Q1 FY2011, stating, "While revenue levels were below expectations, profitability improvement offset the weakness to bring earnings in line. Lower unit sales and a decline in installed base indicate a continuation of recent trends, which temper our enthusiasm for the shares as we wait for improved revenues." In the lodging industry, Jefferies commented on Sunstone Hotel Investors' analyst meeting, stating, "We believe that SHO remains a business on the rebound as the new management team is clearly focused on new acquisitions and a more disciplined strategy. We expect SHO to remain focused in pursuit of acquisitions and RevPAR to accelerate to market levels as the portfolio stabilizes."